Different Legal Forms of Business Flashcards
What are the main types of business structures?
- Sole Trader
- Partnership
- Limited Partnership (LP)
- Limited Liability Partnership (LLP)
- Private company (LTD)
- Public company (PLC)
What governs partnerships in the UK?
The Partnership Act 1890
What is the main difference between general and limited partners in an LP?
Limited partners must not manage business and have limited liability.
General partners manage and have unlimited liability.
What makes LLPs unique?
Separate legal personality and offer limited liability while retaining partnership style fleibility
What should be considered when forming a business?
1) Cost
2) Risk
3) Structure
4) Formalities
5) Privacy
6) Finance
What are key characteristics of sole trader?
No formalities, not separate legal entity, unlimited personal liability, no formal structure, complete privacy
What are key characteristics of a partnership?
No formalities, not separate legal entity, unlimited personal liability, no procedural requirements, complete privacy
How does partners liability take shape?
Unlimited joint in contract, or joint and several in tort
When is a partnership formed?
Persons carrying on a business in common with a view of profit
Does a loan from one to another itself create a partnership?
No
What makes a partnership more likely?
If there is an agreement to share losses and profits
What makes a partnership less likely?
If one person is held out as partner
What do the default terms of Partnership Act 1890 cover?
1) Profits and losses
2) Remuneration
3) Decision making
4) Expulsion
What are default terms of partnerships on profits and losses?
Fully equal, even where contributions of capital are unequal
What does PA 1890 say about remuneration?
Partners not entitled to salary
What dos PA 1890 dictate about decision making?
Made by majority, unless a change in nature of partnership which is unanimity
What does PA 1890 say about expulsion?
Majority cannot expell. Needs to be unanimous
What types of partners are there in a Limited Partnership?
Limited partner and General partner
Is a Limited Partnership registered at Companies House?
Yes, but no requirement to file accounts
What are the default provisions of partners in LLP?
Same as PA 1890
